How The Pet Economy Is Working To Be Investor’s Best Friend – Forbes


Marcel Bens is Managing Partner and COO at Emil Capital Partners .

Pet ownership in America has experienced unprecedented growth, with one survey showing 70% of households—or about 90. 5 million—now own a pet . Data shows the $100 billion pet industry is now poised to nearly triple to $275 billion by 2030 , thanks to a surge in new owners, favorable demographics and, most importantly, increased per-pet spending.

If you’re an investor, you might be seeing dollar signs already, but with this development has come increased competition for consumer dollars. More startups are entering the market with innovative offerings to disrupt incumbent industry leaders, and not every startup has what it takes. So where does a smart trader put their money?

At Emil Capital Partners, we’ve spent years identifying, investing in and supporting the next great consumer brands, and here’s what we are seeing as the next frontiers with regard to growth in pet: better-for-you (BFY) pet food and treats, disruptive healthcare models such as telehealth and over-the-counter (OTC) medications, and overall dog wellness and more contemporary needs like gut health, anxiety or supplemental nutrition.

Humanization Of Pets

First, BFY isn’t just for humans anymore. Accustomed to spending hours online looking for the best quality products for themselves as consumers, digital natives of every generation—especially millennials—tend to spend more time searching online to find better solutions for their pets. They’re increasingly voting with their dollars regarding customized solutions that understand their pets’ needs, too: More than 50% of pet owners surveyed are willing to pay more for eco-friendly family pet care products , up to and including food, where the global natural pet food market has a value of $22. 8 billion . In the U. S., 60% associated with dog and cat owners surveyed are concerned about their pets’ nutrition . In 2020, 41% of dog owners surveyed bought premium pet food and 39% of cat owners purchased premium pet meals.

Case in point: the growing popularity of gourmet fresh artisan pet food. Companies like Ollie prepare fresh recipes using whole food ingredients, cooked for nutrition plus flavor and frozen intended for freshness. (Disclosure: Ollie has received investment from Emil Capital Partners. ) A service like this allows customers in order to tailor recipes for their pets, using technology alongside veterinarian expertise to ensure pets get the right portion of food based on their weight, breed, age, activity level and more.

Disruptive Healthcare Models

High vet bills have long been the bane of pet owners everywhere, and pet owners spent more than $32 billion dollars annually on vet care and product sales in 2021. New comprehensive and lifelong insurance plans, though, are unlocking a long-latent demand for more options to keep furry family members in good health. We also see a broader selection of clinical diagnostic tools and more extensive plans for veterinary treatment. In North America alone, private health insurance was purchased for nearly 3. five million animals in 2020 , exceeding $2 billion in premiums.

As with BFY, telehealth and DTC is now no longer just for humans. Top retailers in the space are usually wading into the healthcare side of things, clearly indicating that this is an area with high potential and upside.

But startups are also making a play for dedicated pet parents who take health seriously and are finding quick success. Get Joy has already expanded beyond food and into on-demand vet services after raising a seed round within January 2022. PetFriendly, meanwhile, promises “human-proof” customized subscription boxes for flea plus tick medication and supplements with personalized packaging featuring pets’ photos. (Disclosure: PetFriendly has received investment from Emil Capital Partners. ) Seek out startups who are thinking beyond the first steps into the market here—a great introductory product is a good start, but building stickiness among consumers takes multiple product offerings alongside value-add services, information or customization.

New Age Of Pet Wellness

Human trends for example gut health, mental health, immunity, oral care, skin care and anti-aging through dietary supplements and other products have also spread to their pets. Grooming parlors are now pet spas along with animal-friendly versions of mani-pedis, bodywork such as massage and more, and they’re a $5 billion business all on their own —but for investors leery associated with capital-intensive retail expansion, there is a potentially more lucrative option in pet wellness.

Let’s talk about supplements. Zesty Paws, which was acquired for $610 million last year , is the leader in pet supplements, boasting treat-like products like hemp-infused chew sticks and salmon oil to help with skin, stress and allergy issues, as well as probiotics to support gut health. It’s the top-selling “multi-condition pet supplement brand” in the United States, and its two-year CAGR is a whopping 62% since 2020. Research is projecting a doubling in the size of the pet supplement market.

Other brands are instead focusing on putting the pet’s best face forward with toothbrush wipes or even other tooth-cleaning alternatives, ways to clear up tear stains, and naturally derived ear cleaning products. Witch hazel, for example , has been a staple in human skin care for decades thanks to its skin-clearing properties; now it features as an ingredient in cleaning wipes for pets’ sensitive pores and skin around their eyes plus ears . This not only appeals to pet parents concerned with health, but also to those whose pets regularly feature on social media and need to look their very best, showing the ability of products like this to appeal to different segments from the pet market.

In today’s current macroeconomic environment, it is important more than ever to offer unique products or services that work to add true value and solve real-life problems for consumers. The growing pet market, from food to wellness to wellness, has made it clear that consumers now demand the same for their animals as they would for themselves or other family members. The millennial generation , in particular, is more willing to pay a premium price as it is considered necessary spending for the entire family versus discretionary or an add-on. The trends we’ve invested in for years inside consumer brands are transforming the pet industry at an even faster clip. Investors prepared to allocate capital to new pet trends and products could very well find they have some new best friends in their portfolios.

The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

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